Mexico warns of possible trade war

Verbal volleys continue in the conflict about the 16-year-old Mexican tomato suspension agreement, with both sides promising to pull out the big guns.

“Mexico will respond: You should ask those who were in the Mexican crosshairs over the trucking dispute. When Mexico aims, Mexico hits the target,” said Auturo Sarukhan, Mexico’s ambassador to the U.S.

Sarukhan issued the warning of a trade war to U.S. media after the Department of Commerce said Sept. 27 it might end the trade agreement, which set a floor price for Mexican tomato imports after an anti-dumping investigation.

His reference to retaliatory tariffs concern a cross-border trucking program dispute that included duties on U.S. products including table grapes, potatoes and apples. U.S. supporters of the tomato agreement have said they fear Mexico would reestablish those tariffs if the suspension agreement is terminated.

Florida tomato growers, who petitioned the Department of Commerce to abolish the agreement, also have strong predictions about what will happen if they get their wish.

“Domestic producers can as well have the full array of legal rights that all other domestic industries have to address imports, if they are believed to be unfairly traded,” said Reggie Brown, manager of the Florida Tomato Committee, Maitland.

Brown and Florida tomato growers contend Mexican growers have been undercutting them, despite the agreement, since it was begun. He said last year’s “collapse of prices in the marketplace” is what drove them to seek its repeal.

The Department of Commerce made its intentions official Oct. 2 by publishing a notice of intent to terminate the tomato deal in the Federal Register. The department nine months before it must make a final decision. A public comment period lasts until Nov. 2; comments can be made at http://tinyurl.com/MexTomatoes.

Many supporters of the agreement are already on the record with the Department of Commerce.

The Fresh Produce Association of the Americas, Nogales, Ariz., has a list of 370 letters of support from produce businesses, members of Congress, produce associations, chambers of commerce at local and federal levels, retailers, and others on a website: www.savemytomato.com.

Most supporters cite potential retaliatory tariffs on other U.S. produce and products, higher prices for tomatoes, and negative economic ripple effects as objections to terminating the agreement.

"… when the U.S. discontinued (the cross-border pilot trucking program) … almost two-thirds of the market for fresh table grapes to Mexico was lost in the first year of those tariffs,” wrote Barry Bedwell, president of the California Grape and Tree Fruit League. Mexico is the second-largest export market for U.S. table grapes.

“The U.S. restaurant and foodservice industry annual purchases of imported Mexico tomatoes are estimated at 1 billion pounds and accounts for roughly 15% of total U.S. Mexico tomato import consumption ... (The termination) could result in volatility in tomato prices for restaurant and foodservice operators and their customers” according to the National Restaurant Association.

Other supporters point out the tomato agreement expires in December and would have been renegotiated then. They suggest Florida growers want to initiate another anti-dumping investigation after the agreement is terminated.

“We believe that this is an effort to manipulate the U.S. marketplace by erecting a trade barrier with Mexico. Representatives of the Florida tomato industry have publicly stated that they want to initiate a new anti-dumping case,” wrote Walter Ram, vice president of food safety for the Bakersfield, Calif.-based Giumarra Cos.

“Pandol Brothers has been involved in five dumping cases over the years. Nobody wins. I watched a small group of California grape growers, basically five companies, ... file an anti-dumping case. This is exactly what is shaping up here, a small special interest protecting its turf with total disregard for the damage they may do to other U.S. export industries,” wrote John Pandol, partner at Pandol Brothers Inc., Delano, Calif.

John Keeling, chief executive officer for the National Potato Council, predicted a no-win scenario if the agreement is terminated.

“It will be very unfortunate if this devolves into a shooting war because this becomes a tit-for-tat and in the end, nobody wins,” Keeling told the New York Times.

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About the Author:

Coral Beach, Staff Writer

Coral Beach joined The Packer newsroom in February 2011, bringing more than 30 years of experience at daily newspapers, trade magazines and online publications. Beach earned a bachelor’s of science degree from the University of Kansas School of Journalism in 1982.
e-mail: cbeach@thepacker.com
phone: 913-438-0781